RBTT Bank (SKN) Limited Financial Statements 31 December 2003

RBTT Bank (SKN) Limited Contents Page Auditors’ Report 1 Balance Sheet 2 Profit and Loss Account 3 Statement of Changes in Equity 4 Statement of Changes in Cash Resources 5 Notes to the Financial Statements 6 – 20

Auditors' Report To the members of RBTT Bank (SKN) Limited We have audited the balance sheet of RBTT Bank (SKN) Limited as at 31 December 2003, the profit

and loss account, statement of changes in equity and statement of changes in cash resources for the

year then ended, as set out on pages 2 to 20. These financial statements are the responsibility of the

company’s management. Our responsibility is to express an opinion on these financial statements

based on our audit.

We conducted our audit in accordance with international standards on auditing. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing

the accounting principles used and significant estimates made by management, as well as evaluating

the overall financial statement presentation. We believe that our audit provides a reasonable basis for

our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position of

the company as at 31 December 2003 and the results of its operations and its changes in cash resources

for the year then ended in accordance with International Financial Reporting Standards.

Chartered Accountants Port of Spain Trinidad, West Indies 30 January 2004

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RBTT Bank (SKN) Limited Balance Sheet (Expressed in Eastern Caribbean dollars) 31 December Notes 2003 2002 $ $ Assets Cash resources 3 11,213,896 12,766,922 Loans and advances 4 36,034,836 36,303,731 Originated securities 5 5,202,708 6,040,064 Investment securities 6 6,816,290 4,909,200 Premises and equipment 7 3,122,405 3,285,792 Miscellaneous assets 486,335 522,424 Total Assets 62,876,470 63,828,133 Liabilities Due to other banks 3,413,811 3,179,757 Customers' deposits 8 46,376,723 49,362,590 Due to affiliated company 135,610 -- Miscellaneous liabilities 695,532 572,835 Total Liabilities 50,621,676 53,115,182 Shareholders’ Equity Share capital 9 5,001,217 5,001,217 Share premium 1,941,734 1,941,734 Statutory reserve 10 1,433,685 1,190,494 Other reserves 11 1,784,085 1,458,195 Retained earnings 2,094,073 1,121,311 Total Shareholders’ Equity 12,254,794 10,712,951 Total Equity And Liabilities 62,876,470 63,828,133 The attached notes set out on pages 6 to 20 form an integral part of these financial statements. On 30 January 2004, the Board of Directors of RBTT Bank (SKN) Limited authorised these financial statements for issue. ______________________ Director ______________________ Director

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RBTT Bank (SKN) Limited Profit And Loss Account (Expressed in Eastern Caribbean dollars) Year Ended 31 December Notes 2003 2002 $ $ Interest income 12 4,965,099 5,081,308 Interest expense 13 1,695,073 2,081,892 Net Interest Income 3,270,026 2,999,416 Other income 14 496,491 603,911 Total Net Income 3,766,517 3,603,327 Loan loss expense 4.3 423,077 82,497 General administrative expenses 824,832 1,029,724 Other operating expenses 1,302,655 1,128,529 Total Non-Interest Expenses 2,550,564 2,240,750 Net Profit For The Year 15 1,215,953 1,362,577 The attached notes set out on pages 6 to 20 form an integral part of these financial statements.

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RBTT Bank (SKN) Limited Statement Of Changes In Equity (Expressed in Eastern Caribbean dollars) Total Share Share Statutory Other Retained Shareholders’ Capital Premium Reserve Reserves Earnings Equity $ $ $ $ $ $ Year ended 31 December 2003 Balance at 1 January 2003 5,001,217 1,941,734 1,190,494 1,458,195 1,121,311 10,712,951 Net profit for the year -- -- -- -- 1,215,953 1,215,953 Transfer to statutory reserve -- -- 243,191 -- (243,191) -- Fair value gains arising during the year -- -- -- 325,890 -- 325,890 Balance at 31 December 2003 5,001,217 1,941,734 1,433,685 1,784,085 2,094,073 12,254,794 Year ended 31 December 2002 Balance at 1 January 2002 5,001,217 1,941,734 917,979 1,458,195 31,249 9,350,374 Net profit for the year -- -- -- -- 1,362,577 1,362,577 Transfer to statutory reserve -- -- 272,515 -- (272,515) -- Balance at 31 December 2002 5,001,217 1,941,734 1,190,494 1,458,195 1,121,311 10,712,951 The attached notes set out on pages 6 to 20 form an integral part of these financial statements.

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RBTT Bank (SKN) Limited Statement Of Changes In Cash Resources (Expressed in Eastern Caribbean dollars) Year Ended 31 December 2003 2002 $ $ Operating Activities Profit before taxation 1,215,953 1,362,577 Adjustments for Allowance for loan losses 370,100 95,400 Capitalised interest on investments and originated securities (663,038) (1,304,015) Depreciation 190,781 164,874 Provision for pension contributions 72,556 72,000 Loss on disposal of equipment -- 10,996 Operating Profit Before Changes In Operating Assets And Liabilities 1,186,352 401,832 (Increase)/decrease in operating assets Loans and advances (117,709) (2,337,401) Interest receivable on loans and advances 16,504 (26,567) Originated securities 1,358,033 667,516 Miscellaneous assets 36,089 (176,018) Increase/(decrease) in operating liabilities Due to other banks 234,054 1,296,371 Customers' deposits (2,946,289) 3,418,794 Interest payable on customers’ deposits (39,578) (14,187) Due to affiliated company 135,610 -- Miscellaneous liabilities 50,141 53,854 Cash (Used In)/Provided By Operating Activities (86,793) 3,284,194 Investing Activities Proceeds from sale of equipment 7,740 -- Purchase of investments (1,438,839) (3,573,889) Additions to premises and equipment (35,134) (89,215) Cash Used In Investing Activities (1,466,233) (3,663,104) Net Decrease In Cash Resources (1,553,026) (378,910) Cash Resources At Beginning Of Year 12,766,922 13,145,832 Cash Resources At End Of Year 11,213,896 12,766,922 The attached notes set out on pages 6 to 20 form an integral part of these financial statements.

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RBTT Bank (SKN) Limited Notes To The Financial Statements 31 December 2003 (Expressed in Eastern Caribbean dollars) 1 Incorporation And Business Activities The Bank is incorporated in St Christopher and Nevis. Its principal activities are commercial and

retail banking operations conducted from a sole branch situated in Charlestown, Nevis. The Bank is a 95% subsidiary of RBTT Bank Caribbean Limited, a company incorporated in St.

Vincent and the Grenadines, with the ultimate parent company being RBTT Financial Holdings Limited which is incorporated in Trinidad and Tobago.

The Bank is regulated under the St Christopher and Nevis Banking Act No. 6 of 1991 (the Banking Act).

2 Accounting Policies

The principal accounting policies adopted in the preparation of these financial statements are set out below:

a Basis of preparation

These financial statements are prepared in Eastern Caribbean dollars and in accordance with International Financial Reporting Standards. The financial statements are prepared under the historical cost convention modified to include the revaluation of available-for-sale investment securities and of freehold land and building.

The preparation of financial statements in conformity with International Financial Reporting

Standards requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results ultimately may differ from those estimates.

b Foreign currency transactions

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions; gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the profit and loss account. Such balances are translated at year-end exchange rates.

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 2 Accounting Policies (Continued) c Loans and advances and allowance for losses

Loans and advances are stated at principal outstanding net of any unearned interest and of an allowance for credit losses. A loan is classified as impaired when there is objective evidence that the Bank will not be able to collect all amounts due, according to the original contracted terms of the loans. The amount of the allowance for impairment is the difference between the carrying amount and the recoverable amount, being the present value of expected future cash flows, including amounts recoverable from guarantees and collateral, discounted at the original effective interest rate on loans. The allowance which is made during the year, less amounts released and recoveries of bad debts previously written off, is charged against the profit and loss account. When a loan is deemed uncollectible, it is written off against the related allowance for losses.

d Originated securities

Securities originated by the Bank, by providing money directly to the borrower or to a sub-participation agent at draw down, other than those originated with the intent of being sold immediately or in the short term are categorized as securities originated by the Bank and carried at amortised cost.

e Investment securities

Investment securities with fixed maturity where management has both the intent and the ability to hold to maturity are classified as held-to-maturity. Investment securities intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices are classified as available-for-sale. Management determines the appropriate classification of its investments at the time of the purchase.

Investment securities are initially recognised at cost (which includes transaction costs).

Available-for-sale financial assets are subsequently re-measured at fair value based on quoted bid prices or amounts derived from cash flow models. Fair values for unquoted equity instruments are estimated using applicable price/earnings or price/cash flow ratios refined to reflect the specific circumstances of the issuer. Unrealised gains and losses arising from changes in the fair value of securities classified as available-for-sale are recognised in equity. When the securities are disposed of, the related accumulated fair value adjustments are included in the profit and loss account as gains and losses on investment securities. When securities become impaired, the related accumulated fair value adjustments previously recognised in equity are included in the profit and loss account as impairment expense on investment securities.

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 2 Accounting Policies (Continued) e Investment securities (Continued)

A financial asset is impaired if its carrying amount is greater than its estimated recoverable

amount. The recoverable amount of an investment measured at fair value is the present value of expected future cash flows discounted at the current market rate of interest for a similar financial asset.

Held-to-maturity investments are carried at amortised cost using the effective yield method,

less provision for impairment. Interest earned whilst holding investment securities is reported as interest income. Dividends

receivable are included separately in dividend income when a dividend is declared. All purchases and sales of investment securities are recognised at settlement date.

f Premises and equipment

Freehold buildings are stated at valuation conducted in 1990 with subsequent additions at cost less accumulated depreciation. All other fixed assets are stated at cost less accumulated depreciation.

Depreciation is calculated based on the following methods and rates: Method Rates Freehold buildings Straight line 2% Furniture and equipment Reducing balance 20% Computer equipment Reducing balance 33 ⅓% Motor vehicles Straight line 25%

Gains and losses on disposal of premises and equipment are determined by reference to their carrying amount and are taken into account in determining operating profit. Repairs and maintenance costs are charged to the profit and loss account when the expenditure is incurred.

g Interest income and expense

Interest income and interest expense are recognised in the income statement for all interest bearing instruments on an accrual basis. Interest income includes coupons earned on fixed income investments, loans and advances and accrued discount and premium on treasury bills and other discounted instruments.

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 2 Accounting Policies (Continued)

h Taxation

Deferred tax is provided, where material, using the liability method, for temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine deferred tax (see note 16).

Deferred tax assets relating to the carryforward of unused tax losses are recognized to the

extent that it is probable that future taxable profits will be available against which the unused tax losses can be utilised.

i Pensions

The Bank provides for employees’ retirement benefits through a defined contribution plan that provides an employee with a lumpsum on retirement. Contributions to the plan are charged to the profit and loss account in the year to which they relate.

j Cash resources

Cash resources comprise cash and balances with central banks, amounts due from other banks and affiliated companies and cheques and other items in transit.

k Comparatives Where necessary, comparatives have been adjusted to conform with changes in presentation

in the current year. 3 Cash Resources 2003 2002 $ $ Cash on hand 554,071 722,172 Deposits with affiliated companies 4,829,751 6,521,734 Due from other banks 2,852,652 2,501,377 Statutory deposit with the Eastern Caribbean Central Bank 2,725,781 2,916,000 Cheques and other items in transit (net) 251,641 105,639 11,213,896 12,766,922

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 4 Loans And Advances 2003 2002 $ $ Performing loans and advances 33,809,424 33,936,548 Non-performing loans and advances 4,996,370 4,954,284 38,805,794 38,890,832 Unearned interest (892,153) (1,094,900) 37,913,641 37,795,932 Interest receivable 190,795 207,299 Allowance for losses (2,069,600) (1,699,500) 36,034,836 36,303,731 4.1 Sectoral analysis Residential mortgages 16,587,689 16,061,901 Distribution 9,800,909 10,019,886 Consumer 4,626,686 5,093,037 Professional and other services 3,397,722 3,319,689 Government/administration 1,108,742 2,040,184 Tourism 894,748 908,926 Transport 1,781,073 561,338 Mining and quarrying 331,269 553,550 Entertainment and catering 133,113 175,466 Manufacturing 143,136 137,305 Fisheries -- 5,808 Utilities 707 13,742 38,805,794 38,890,832 4.2 Allowance for losses Balance at beginning of year 1,699,500 1,604,100 Charge for the year 370,100 95,400 Balance at end of year 2,069,600 1,699,500 4.3 Loan loss expense Charge for the year 370,100 95,400 Amounts directly written off 53,136 6,158 Recoveries (159) (19,061) 423,077 82,497

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 4 Loans And Advances (Continued) 2003 2002 $ $ 4.4 Sectoral analysis of loan commitments Residential mortgages 80,529 144,552 Distribution 300,267 131,825 Consumer 20,938 64,345 Other 399,239 345,476 800,973 686,198 5 Originated Securities Government securities 5,202,708 6,040,064 6 Investment Securities Securities held-to-maturity (at amortised cost) Government and state-owned enterprises 1,000,000 3,708,400 Corporate securities 230,847 230,847 1,230,847 3,939,247 Securities available-for-sale (at fair value) Government and state-owned enterprises 5,487,243 871,753 Equity securities 98,200 98,200 5,585,443 969,953 6,816,290 4,909,200

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 7 Premises And Equipment Capital Furniture Work Freehold Freehold and Computer Motor in Land Building Equipment Equipment Vehicle Progress Total $ $ $ $ $ $ $ Year ended 31 December 2003 Opening net book value 157,000 2,712,231 122,696 289,083 -- 4,782 3,285,792 Additions -- -- 4,500 21,748 -- 8,886 35,134 Transfers -- -- 245 4,537 -- (4,782) -- Disposals -- -- -- (7,740) -- -- (7,740) Depreciation charge -- (66,182) (24,797) (99,802) -- -- (190,781) Closing net book value 157,000 2,646,049 102,644 207,826 -- 8,886 3,122,405 At 31 December 2003 Cost/Revaluation 157,000 3,309,114 249,995 911,558 95,000 8,886 4,731,553 Accumulated depreciation -- (663,065) (147,351) (703,732) (95,000) -- (1,609,148) Net book value 157,000 2,646,049 102,644 207,826 -- 8,886 3,122,405 At 31 December 2002 Cost/Revaluation 157,000 3,309,114 245,250 893,739 95,000 4,782 4,704,885 Accumulated depreciation -- (596,883) (122,554) (604,656) (95,000) -- (1,419,093) Net book value 157,000 2,712,231 122,696 289,083 -- 4,782 3,285,792 In 1990, the Bank's freehold land and building were revalued by independent surveyors. The

revaluation was done on the basis of replacement cost and resulted in a surplus of $1,458,195 being transferred to a revaluation reserve (see note 11).

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 8 Customers' Deposits 2003 2002 $ $ Deposit balances 46,207,271 49,153,560 Accrued interest 169,452 209,030 46,376,723 49,362,590 Sectoral analysis of customers' deposits

Consumers 41,452,462 44,392,628 Private sector 3,291,188 2,979,217 State sector 1,463,621 1,781,715 46,207,271 49,153,560 9 Share Capital Authorised An unlimited number of ordinary shares of no par value Issued and fully paid 5,001,217 ordinary shares of no par value 5,001,217 5,001,217 10 Statutory Reserve

Under the St. Christopher and Nevis Banking Act No. 6 of 1991, the Bank is required to transfer at least 20% of the net profit after deductions of taxes in each year to a statutory reserve account until the reserve is equal to the paid up capital of the Bank.

11 Other Reserves Property revaluation surplus 1,458,195 1,458,195 Investment revaluation reserve 325,890 -- 1,784,085 1,458,195

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 12 Interest Income 2003 2002 $ $ Deposits with related companies 437,079 323,062 Loans and advances 3,809,485 4,080,750 Investment securities 718,535 677,496 4,965,099 5,081,308

13 Interest Expense Customers’ deposits 1,534,286 1,957,023 Due to other banks 160,787 124,869 1,695,073 2,081,892 14 Other Income Fee and commission income 304,196 383,006 Foreign exchange earnings 180,644 208,208 Dividend income 4,820 4,820 Rental of car park 6,831 7,877 496,491 603,911 15 Net Profit For The Year Net profit for the year is arrived at after charging the following: Depreciation 190,781 164,874 Retirement benefit expense 106,588 109,764 Directors' fees 13,500 15,000 Auditors' remuneration 30,321 29,548

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 16 Taxation At 31 December 2003 there were tax losses amounting to $4,891,091 (2002 - $3,995,818) available

for utilisation against future profits. The losses have not yet been agreed by the tax authorities. The losses are due to expire as follows:

2004 - 543,617 2005 - 1,328,816 2006 - 896,833 2007 - 821,518 2008 - 1,300,307 The benefit of these tax losses has not been recognised in these financial statements due to the

uncertainty of their recoverability. 17 Related Party Balances

A number of banking transactions are entered into with related parties in the normal course of business. These include loans and deposits. These transactions were carried out on commercial terms and conditions and at market rates.

18 Contingent Liabilities

(i) As at 31 December 2003 there was a legal proceeding outstanding against the Bank. No provision has been made as professional advice indicates that it is unlikely that any significant loss will eventuate.

(ii) The Bank has received assessments from the Inland Revenue Department totalling $859,672 for

yeas of income 1997, 1998, 1999 and 2001. However, the Bank has objected to these assessments by way of letters dated 16 December 1999 and 2 September 2002. No provision has been made as professional advice indicates that the matter will be resolved in the Bank’s favour.

19 Pensions

By deed of adherence dated 28 May 2003, the employees of the Bank became members of its parent company (RBTT Caribbean Limited) pension fund plan. The liability in respect of employees’ service costs for this year of $72,556 (2002 - $72,000) has been charged to the profit and loss account.

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 20 Interest Rate Risk Interest sensitivity of assets and liabilities

The Bank is exposed to various risks associated with the effects of fluctuations in the prevailing levels of market rates on its financial position and cash flows. Interest margins may increase as a result of such changes but may reduce or create losses in the event that unexpected movements arise. The table below summarises the Bank’s exposure to interest rate risks. Included in the table are the Bank’s assets and liabilities at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.

Up to One to Over Non- One five five interest year years years bearing Total As at 31 December 2003 ($’000) ($’000) ($’000) ($’000) ($’000)

Assets Cash resources 4,708 -- -- 6,506 11,214 Loans and advances 7,338 18,469 5,231 4,996 36,034 Originated securities 1,207 3,996 -- -- 5,203 Investment securities 1,231 5,487 -- 98 6,816 Other assets -- -- -- 3,609 3,609

Total assets 14,484 27,952 5,231 15,209 62,876

Liabilities Customers’ deposits 42,157 1,289 -- 2,931 46,377 Other liabilities 3,414 -- -- 831 4,245

Total liabilities 45,571 1,289 -- 3,762 50,622 Interest Sensitivity Gap (31,087) 26,663 5,231 As at 31 December 2002 Assets Cash resources 6,421 -- -- 6,346 12,767 Loans and advances 8,847 18,121 4,382 4,954 36,304 Originated securities 1,358 4,682 -- -- 6,040 Investment securities 231 4,580 -- 98 4,909 Other assets -- -- -- 3,808 3,808

Total assets 16,857 27,383 4,382 15,206 63,828 Liabilities Customers’ deposits 45,443 -- -- 3,920 49,363 Other liabilities 3,180 -- -- 572 3,752

Total liabilities 48,623 -- -- 4,492 53,115 Interest Sensitivity Gap (31,766) 27,383 4,382

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 21 Currency Risk

The Bank has no significant foreign exchange exposure since assets are funded by liabilities in the same currency. Foreign currency transactions have not required the use of any derivative instruments.

Concentrations of assets and liabilities

The Bank had the following significant currency positions:

EC USD Other Total As at 31 December 2003 ($'000) ($'000) ($'000) ($'000) Assets Cash resources 5,345 5,552 317 11,214 Loans and advances 34,716 1,318 -- 36,034 Originated securities -- 5,203 -- 5,203 Investment securities 1,329 5,487 -- 6,816 Other assets 3,609 -- -- 3,609 Total assets 44,999 17,560 317 62,876

Liabilities Customers’ deposits 40,332 6,045 -- 46,377 Other liabilities 4,245 -- -- 4,245 Total liabilities 44,577 6,045 -- 50,622 Net balance sheet position 422 11,515 317 12,254 Credit commitments 801 -- -- 801 As at 31 December 2002 Total assets 49,462 14,204 162 63,828 Total liabilities 48,292 4,823 -- 53,115 Net balance sheet position 1,170 9,381 162 10,713 Credit commitments 686 -- -- 686

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 22 Liquidity Risk Up to 1-5 Over 5 1 year years years Total ($’000) ($’000) ($’000) ($’000)

Maturities of assets and liabilities The table below analyses assets and liabilities of the Bank into relevant maturity groupings based on the remaining period at balance sheet date to the contractual maturity date. As at 31 December 2003 Assets Cash resources 11,214 -- -- 11,214 Loans and advances 2,755 10,183 23,096 36,034 Originated securities 1,207 3,996 -- 5,203 Investments 1,231 5,487 98 6,816 Other assets 487 -- 3,122 3,609 Total assets 16,894 19,666 26,316 62,876 Liabilities Customers deposits 45,088 1,289 -- 46,377 Other liabilities 4,245 -- -- 4,245 Total liabilities 49,333 1,289 -- 50,622 Net liquidity gap (32,439) 18,377 26,316 12,254 As at 31 December 2002 Assets Cash resources 12,767 -- -- 12,767 Loans and advances 4,120 9,355 22,829 36,304 Originated securities 1,358 4,682 -- 6,040 Investments 231 4,580 98 4,909 Other assets 522 -- 3,286 3,808 Total assets 18,998 18,617 26,213 63,828 Liabilities Customers deposits 49,363 -- -- 49,363 Other liabilities 3,752 -- -- 3,752 Total liabilities 53,115 -- -- 53,115 Net liquidity gap (34,117) 18,617 26,213 10,713

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars) 22 Liquidity Risk (Continued)

The Bank is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing deposits, loan draw downs, guarantees and other calls on cash settled items. A broad range of funds is managed to ensure that liquidity requirements are met. The Bank’s liquidity strategy relies on sufficient cash and marketable instruments such as treasury bills and government securities to meet short term requirements. Fall back techniques include access to local interbank and institutional markets, call features on selected advances, stand-by lines of credit with external parties, and the ability to close out or liquidate market positions. Daily float, liquid assets, funding concentration and diversification are all prudently managed to ensure that the Bank has sufficient funds to meet its obligations.

23 Fair Value Of Financial Assets And Liabilities

Financial assets and liabilities not carried at fair value include cash resources, loans and advances, originated securities, investment securities held to maturity, due to other banks and customers’ deposits. The following comments are relevant to their fair value.

Assets

Cash resources

Since these assets are short-term in nature, the values are taken as indicative of realisable fair value.

Loans and advances

Loans and advances are net of specific provision for losses. These assets result from transactions conducted under typical market conditions and their values are not adversely affected by unusual terms. The inherent rates of interest in the portfolio approximate market conditions and yield discounted cash flow values which are substantially in accordance with financial statements amounts.

Originated securities

Fair value for originated securities is based on market prices. Where this information is not available, fair value is estimated using quoted market prices for securities with similar credit characteristics or discounted cash flow models. Carrying Value Fair Value $ $ Balance at 31 December 2003 5,202,708 5,669,417

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RBTT Bank (SKN) Limited Notes To The Financial Statements (Continued) 31 December 2003 (Expressed in Eastern Caribbean dollars)

23 Fair Value Of Financial Assets And Liabilities (Continued)

Investment securities held to maturity Fair value for investment securities is based on market prices. Where this information is not available, fair value is estimated using quoted market prices for securities with similar credit characteristics or discounted cash flow models. Carrying Value Fair Value $ $ Balance at 31 December 2003 1,230,847 1,230,847

Liabilities

Due to banks and customers’ deposits

Deposits with fixed rate characteristics are at rates which are not significantly different from current rates and are assumed to have discounted cash flow values which approximate carrying values.